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Japan PMI August 2020

Japan: Services and manufacturing PMI remain in contractionary territory in August

The Jibun Bank Composite Purchasing Managers’ Index (PMI)—which combines the PMIs of the services and manufacturing sectors—remained at 44.9 in August according to a flash reading, unchanged from July’s figure. As such, the reading remained below the 50-threshold, and therefore indicated another month of decline in overall activity.

The services PMI inched down to 45.0 in August from 45.4 in July, as the contraction in new business accelerated and external demand continued to decline. Moreover, service sector employment dropped for the sixth month running. On the manufacturing side, the PMI rose to 46.6 in August from July’s 45.2 reading, as production and new orders decreased at slower rates and the pace of job shedding also moderated.

Commenting on the results, Bernard Aw, principal economist at IHS Markit, reflected:

“Japanese business activity continued to contract in August, according to flash PMI data, adding to concerns about the depth of the economic downturn and recover pace as conditions remain challenging for manufacturers and service providers due to the Covid-19 pandemic. […] The prospect of a solid recovery remains highlight uncertain as Japanese firms were pessimistic about the business outlook on balance in August. Rising unemployment may also hit domestic household income and spending in the months ahead.”

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